8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 1, 2016

WINGSTOP INC.

(Exact name of registrant as specified in its charter)

Delaware	001-37425	47-3494862
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification No.)
5501 LBJ Freeway, 5th Floor, Dallas, Texas		75240
(Address of principal executive offices)		(Zip Code)

(972) 686-6500

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.” Consequently, it is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section. It may only be incorporated by reference in another filing under the Securities Exchange Act of 1934 or Securities Act of 1933 if such subsequent filing specifically references this Form 8-K.

On November 1, 2016, Wingstop Inc. issued a press release reporting the Company’s financial results for its third fiscal quarter ended September 24, 2016. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein in its entirety. The press release uses the following non-GAAP financial measures: EBITDA, Adjusted EBITDA, adjusted net income, and adjusted earnings per diluted share. A discussion of these financial measures, including a discussion of the usefulness and purpose of each measure, is included below.

EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA are supplemental measures of our performance that are not required by, or presented in accordance with, U.S. GAAP. EBITDA and Adjusted EBITDA are not measurements of our financial performance under U.S. GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flows from operating activities as a measure of our liquidity.

We define “EBITDA” as net income before interest expense, net, income tax expense, and depreciation and amortization. We define “Adjusted EBITDA” as EBITDA further adjusted for management fees and expense reimbursement, management agreement termination fees, transaction costs, gains and losses on the disposal of assets, and stock-based compensation expense. We caution investors that amounts presented in accordance with our definitions of EBITDA and Adjusted EBITDA may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate EBITDA and Adjusted EBITDA in the same manner. We present EBITDA and Adjusted EBITDA because we consider them to be important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations period over period and would ordinarily add back non-cash expenses such as depreciation and amortization, as well as items that are not part of normal day-to-day operations of our business.

Management uses EBITDA and Adjusted EBITDA:

• as a measurement of operating performance because they assist us in comparing the operating performance of our restaurants on a consistent basis, as they remove the impact of items not directly resulting from our core operations;

• for planning purposes, including the preparation of our internal annual operating budget and financial projections;

• to evaluate the performance and effectiveness of our operational strategies;

• to evaluate our capacity to fund capital expenditures and expand our business; and

• to calculate incentive compensation payments for our employees, including assessing performance under our annual incentive compensation plan and determining the vesting of performance shares.

By providing these non-GAAP financial measures, together with a reconciliation to the most comparable GAAP measure, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. Items excluded from these non-GAAP measures are significant components in understanding and assessing financial performance. In addition, the instruments governing our indebtedness use EBITDA (with additional adjustments) to measure our compliance with covenants such as fixed charge coverage, lease adjusted leverage and debt incurrence. EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation, or as an alternative to, or a substitute for net income or other financial statement data presented in our consolidated financial statements as indicators of financial performance. Some of the limitations are:

• such measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;

• such measures do not reflect changes in, or cash requirements for, our working capital needs;

• such measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

• such measures do not reflect our tax expense or the cash requirements to pay our taxes;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and such measures do not reflect any cash requirements for such replacements; and

• other companies in our industry may calculate such measures differently than we do, limiting their usefulness as comparative measures.

Due to these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using these non-GAAP measures only supplementally. As noted in the attached exhibit, Adjusted EBITDA includes adjustments for transaction costs, gains and losses on disposal of assets and stock-based compensation, among other items. It is reasonable to expect that these items will occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our restaurants and complicate comparisons of our internal operating results and operating results of other restaurant companies over time. In addition, Adjusted EBITDA includes adjustments for other items that we do not expect to regularly record, such as management fees and expense reimbursement. Each of the normal recurring adjustments and other adjustments described in this paragraph and in the attached exhibit help management with a measure of our core operating performance over time by removing items that are not related to day-to-day operations.

Adjusted Net Income and Adjusted Earnings per Diluted Share. Adjusted net income represents net income adjusted for management fees, transaction costs related to refinancings of our credit agreement and our public offerings and related tax adjustments that management believes are not indicative of the Company’s core operating results or business outlook over the long-term. However, it is reasonable to assume that transaction costs for financing transactions may occur in future periods. Adjusted earnings per diluted share is defined as Adjusted net income divided by diluted share count. Adjusted net income and adjusted earnings per diluted share are supplemental measures of operating performance that do not represent and should not be considered alternatives to net income and earnings per share, as determined by GAAP. These measures have not been prepared in accordance with Article 11 of Regulation S-X. Management believes adjusted net income and adjusted earnings per diluted share supplement GAAP measures and enables them to more effectively evaluate the Company’s performance period-over-period and relative to competitors.

Item 9.01 Financial Statements and Exhibits

(d)    Exhibits

99.1    Press release, dated November 1, 2016 (furnished to the Commission as part of this Form 8-K).

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			Wingstop Inc.
			(Registrant)
Date:	November 1, 2016	By:	/s/ Michael F. Mravle
			Chief Financial Officer (Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release, dated November 1, 2016.

EX-99.1

FOR IMMEDIATE RELEASE

Wingstop Inc. Reports Fiscal Third Quarter 2016 Financial Results

Raises Annual Guidance for Fiscal Year 2016

Dallas, November 1, 2016 - (GLOBE NEWSWIRE) - Wingstop Inc. (NASDAQ: WING) today announced fiscal third quarter 2016 financial results for the period ended September 24, 2016 and raised annual guidance for fiscal year 2016.

Highlights for the Fiscal Third Quarter 2016 compared to the Fiscal Third Quarter 2015

▪ Total revenue increased14.0% to $21.8 million

▪ System-wide restaurant count increased 17.6% to 949 worldwide locations

▪ Domestic same store sales increased 4.1%

▪ Net income decreased to $2.8 million, or $0.09 per diluted share, compared to $3.2 million, or $0.11 per diluted share

▪ Adjusted EBITDA*, a non-GAAP measure, increased27.1% to $8.3 million

▪ Adjusted net income*, a non-GAAP measure, increased17.6% to $3.7 million

▪ Adjusted earnings per diluted share*, a non-GAAP measure, increased18.2% to $0.13 from the prior year period

* Adjusted EBITDA, adjusted net income and adjusted earnings per diluted share are non-GAAP measures. Reconciliations of adjusted EBITDA, adjusted net income and adjusted earnings per diluted share to the most directly comparable financial measures presented in accordance with GAAP, are set forth in the schedules accompanying this release. See “Non-GAAP Financial Measures.”

President and Chief Executive Officer Charlie Morrison stated, “Our ‘category of one’ brand positioning and focus on unit development, revenue growth, and profitability are enabling us to deliver consistently strong quarterly performances, including a very solid third quarter. Based upon our results to date and expectations for a strong finish to the fiscal year, we are pleased to be raising our annual guidance.”

Morrison concluded, “We opened 104 net new locations so far in 2016, and ended the fiscal third quarter with 949 restaurants worldwide, representing nearly 18% unit growth over the prior-year period. We now expect 145 to 155 system-wide openings in 2016, as we close in on the 1,000 unit milestone worldwide by year-end. As we march towards our 2,500 unit goal domestically, we will also continue to grow our international presence in markets that have Western brand appeal and high per capita chicken consumption. Recently, we signed a new development agreement for Colombia and Panama for 30 restaurant openings over the next five years, which like the Saudi Arabia deal announced in August, reflects the strength of our international potential.”

Key Operating Metrics for the Fiscal Third Quarter 2016 Compared to the Fiscal Third Quarter 2015

	Thirteen Weeks Ended
	September 24, 2016			September 26, 2015
Number of system-wide restaurants open at end of period	949			807
Number of domestic franchise restaurants open at end of period	862			737
Number of international franchise restaurants open at end of period	67			51
System-wide sales (in thousands)	$	235,975		$	201,656
System-wide domestic same store sales growth	4.1		%	6.3		%
Adjusted EBITDA (in thousands)	$	8,319		$	6,543

Fiscal Third Quarter 2016 Financial Results

Total revenue for the fiscal third quarter 2016increased14.0% to $21.8 million from $19.1 million in the fiscal third quarter last year.

▪ Royalty revenue and franchise fees increased$2.1 million to $13.7 million from $11.6 million in the fiscal third quarter last year. This was primarily due to a 17.9% increase in the number of franchised restaurants and domestic same store sales growth of 4.1%.

▪ Company-owned restaurant sales increased$0.6 million to $8.2 million from $7.5 million in the fiscal third quarter last year. The increase was the result of company-owned domestic same store sales growth of 4.8% and the opening of one company-owned restaurant in the Dallas area during the second fiscal quarter of 2016.

Cost of sales increased14.3% to $6.1 million from $5.3 million in the prior fiscal year’s third quarter. As a percentage of company-owned restaurant sales, cost of sales increased400 basis points to 74.7% from 70.7%. The increase was driven primarily by an increase in labor as we make investments in roster sizes and staffing to support the continued top line growth in our company-owned restaurants, as well as the ramp up of one company-owned restaurant that opened during the second fiscal quarter of 2016 as it gets to normal efficiency, offset by 1.9% decline in commodities rates for bone-in chicken wings as compared to the prior year period.

Selling, general & administrative expenses (SG&A) increased21.5% to $8.9 million compared to $7.3 million in the prior fiscal year’s third quarter. The increase in SG&A expense is primarily due to nonrecurring costs of $1.4 million related to the refinancing of our credit agreement and subsequent dividend payout completed during the current fiscal quarter, compared to no nonrecurring expenses in the prior fiscal quarter.

Net income decreased to $2.8 million, or $0.09 per diluted share, compared to net income of $3.2 million, or $0.11 per diluted share in the prior fiscal year’s third quarter.

Adjusted net income increased17.6% to $3.7 million, or $0.13 per diluted share, compared to $3.2 million, or $0.11 per diluted share, in the prior fiscal year’s third quarter. A reconciliation between net income and adjusted net income is included in the accompanying financial data.

Restaurant Development

As of September 24, 2016, there were 949 Wingstop restaurants system-wide. This included 882 restaurants in the United States, of which 862 were franchised restaurants and 20 were company-owned. Our international presence consisted of 67 franchised restaurants across five countries. During the fiscal third quarter 2016, there were 35 net system-wide Wingstop openings, including four international franchised locations and no closures.

Fiscal Year 2016 Financial Outlook

For the fiscal year ending December 31, 2016, we are updating our financial outlook to the following:

• Total revenue between $90.5 million and $91.5 million(up from $90 million and $91 million), an increase of approximately 17% from 2015

• 145 to 155 net system-wide restaurant openings (up from 130 to 140), representing approximately 18% unit growth

• One additional company-owned restaurant expected to open in the fourth quarter (included in the net openings range provided above)

• Domestic same store sales growth between 3.5% and 4.0%

• SG&A expenses between $34.0 million and $34.5 million inclusive of approximately $1.1 million of stock based compensation expense, $1.1 million of expenses associated with our franchisee convention, $0.8 million of expenses associated with the 53^rd week, $0.8 million of incremental on-going public company costs, $0.5 million of transaction costs related to the March 2016 secondary stock offering, and $1.6 million of transaction costs related to the June 2016 debt refinancing.

• Net income, EBITDA and Adjusted EBITDA are expected to be as follows (in millions):    

	Year Ended
	December 31, 2016
	Low		High
Net income	$	14.6	$	15.1
Interest expense, net	4.5		4.4
Income tax expense	8.9		9.1
Depreciation and amortization	3.1		3.0
EBITDA	$	31.1	$	31.6
Additional adjustments:
Transaction costs (a)	2.3		2.3
Stock-based compensation expense (b)	1.1		1.1
Adjusted EBITDA	$	34.5	$	35.0
(a) Represents estimated costs and expenses related to refinancings of our credit agreement and our public offerings; all transaction costs are included in SG&A with the exception of $0.2 million that is included in Other expense, net.
(b) Estimated non-cash, stock-based compensation.

• Net income, Adjusted net income and Adjusted earnings per diluted share are expected to be as follows (in millions, except share and per share data):

	Year Ended
	December 31, 2016
	Low			High
Numerator:
Net income	$	14.6		$	15.1
Adjustments
Transaction costs (a)	2.3			2.3
Tax effect of adjustments (b)	(0.9		)	(0.9		)
Adjusted net income	$	16.0		$	16.5
Denominator:
Weighted-average shares outstanding - diluted	29,000			29,000
Adjusted earnings per diluted share	$	0.55		$	0.57
(a) Represents estimated costs and expenses related to refinancings of our credit agreement and our public offerings; all transaction costs are included in SG&A with the exception of $0.2 million that is included in Other expense, net.
(b) Represents the tax effect of the aforementioned adjustments to reflect corporate income taxes at the forecasted effective tax rate of 37.5% for the period ended December 31, 2016, which includes provisions for U.S. federal income taxes, and assumes the respective statutory rates for applicable state and local jurisdictions.

• Included in the above amounts is the expected impact of the 53^rd week of fiscal year 2016, which is approximately $1.4 million of revenue and $0.3 million of adjusted EBITDA

The following definitions apply to these terms as used in this release:

Same store sales reflects the change in year-over-year sales for the comparable restaurant base. We define the comparable restaurant base to include those restaurants open for at least 52 full weeks. This measure highlights the performance of existing restaurants, while excluding the impact of new restaurant openings and closures.

System-wide sales represents net sales for all of our company-owned and franchised restaurants, as reported by franchisees.

Adjusted EBITDA is defined as net income before interest expense, net, income tax expense, and depreciation and amortization (EBITDA) further adjusted for management fees and expense reimbursement, management agreement termination fees, transaction costs, gains and losses on the disposal of assets, and stock-based compensation expense. We caution investors that amounts presented in accordance with our definitions of EBITDA and Adjusted EBITDA may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate EBITDA and Adjusted EBITDA in the same manner.

Adjusted net income is defined as net income plus management fees, transactions costs and non-cash gains and losses resulting from the disposal of assets, minus related adjustments to income tax expense.

Adjusted earnings per diluted share is defined as adjusted net income divided by diluted share count.

Conference Call & Webcast

Charlie Morrison, President and Chief Executive Officer, and Mike Mravle, Chief Financial Officer, will host a conference call today to discuss fiscal third quarter 2016 financial results and the fiscal year 2016 financial outlook at 4:30 PM Eastern Time.

The conference call can be accessed live by dialing 201-689-8562. A replay will be available two hours after the call and can be accessed by dialing 858-384-5517; the passcode is 13647415. The replay will be available through Tuesday, November 8, 2016.

The conference call will also be webcast live and later archived on the investor relations section of Wingstop’s corporate website at ir.wingstop.com under the ‘News & Events’ section.

About Wingstop

Founded in 1994 and headquartered in Dallas, Texas, Wingstop Inc. (NASDAQ:WING) operates and franchises 949 restaurants across the United States, Mexico, Singapore, the Philippines, Indonesia, and the United Arab Emirates as of the end of the fiscal third quarter 2016. Having grown its domestic same store sales for 12 consecutive years, the Company has been ranked #3 on the “Top 100 Fastest Growing Restaurant Chains” by Nation’s Restaurant News (2016), #7 on the “Top 40 Fast Casual Chains” by Restaurant Business (2016), and was named “Best Franchise Deal in North America” by QSR magazine (2014). Wingstop has been designated a certified Great Place to Work® (2016), and was ranked #88 on Fortune’s 100 Best Medium Workplaces list in October 2016. The Wing Experts’ menu features classic and boneless wings with 11 bold, distinctive flavors including Original Hot, Cajun, Atomic, Mild, Teriyaki, Lemon Pepper, Hawaiian, Garlic Parmesan, Hickory Smoked BBQ, Louisiana Rub and Mango Habanero. Wingstop’s wings are always cooked to order, hand-sauced and tossed and can be paired with a variety of house-made sides including hand-cut, seasoned fries. For more information visit www.wingstop.com or www.wingstopfranchise.com.  Follow us onfacebook.com/Wingstop and Twitter @Wingstop.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use non-GAAP financial measures including those indicated above. By providing non-GAAP financial measures, together with a reconciliation to the most comparable GAAP measure, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. These measures are not intended to be considered in isolation or as substitutes for, or superior to, financial measures prepared and presented in accordance with GAAP. The non-GAAP measures used in this press release may be different from the measures used by other companies. A reconciliation of each measure to the most directly comparable GAAP measure is available in this news release. In addition, the Current Report on Form 8-K furnished to the SEC concurrent with the issuance of this press release includes a more detailed description of each of these non-GAAP financial measures, together with a discussion of the usefulness and purpose of such measures.

Forward-looking Information

Certain statements contained in this news release, as well as other information provided from time to time by Wingstop Inc. or its employees, may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “guidance,” “anticipate,” “estimate,” “expect,” “forecast,” “project,” “plan,” “intend,” “believe,” “confident,” “may,” “should,” “can have,” “likely,” “future” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Examples of forward-looking statements in this news release include our fiscal year 2016 outlook for new restaurant openings, domestic same store sales growth, total revenue, SG&A expenses, adjusted EBITDA, adjusted net income, adjusted earnings

per diluted share and our diluted share count, as well as our anticipated potential domestic restaurant expansion opportunity and positioning to deliver sustainable and profitable growth.

Any such forward looking statements are not guarantees of performance or results, and involve risks, uncertainties (some of which are beyond the Company’s control) and assumptions. Although we believe any forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results and cause them to differ materially from those anticipated in any forward-looking statements. Please refer to the risk factors discussed in our Form 10-K for the year ended December 26, 2015, which can be found at the SEC’s website www.sec.gov. The discussion of these risks is specifically incorporated by reference into this news release.

Any forward-looking statement made by Wingstop Inc. in this press release speaks only as of the date on which it is made. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Media Contact

Joy Murphy

646-277-1242

wingstop@icrinc.com

Investor Contact

Raphael Gross

203-682-8253

raphael.gross@icrinc.com

WINGSTOP INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(amounts in thousands, except share and per share amounts)

	September 24, 2016			December 26, 2015
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	3,828		$	10,690
Accounts receivable, net	2,529			3,404
Prepaid expenses and other current assets	2,899			1,752
Advertising fund assets, restricted	2,114			3,774
Total current assets	11,370			19,620
Property and equipment, net	4,871			4,593
Goodwill	45,128			45,128
Trademarks	32,700			32,700
Customer relationships, net	17,279			18,296
Other non-current assets	991			313
Total assets	$	112,339		$	120,650
Liabilities and stockholders' deficit
Current liabilities
Accounts payable	$	1,693		$	1,360
Other current liabilities	8,553			7,436
Current portion of debt	3,500			—
Advertising fund liabilities, restricted	2,114			3,774
Total current liabilities	15,860			12,570
Long-term debt, net	153,933			95,008
Deferred revenues, net of current	7,272			7,623
Deferred income tax liabilities, net	12,950			13,018
Other non-current liabilities	2,273			2,104
Total liabilities	192,288			130,323
Commitments and contingencies
Stockholders' deficit
Common stock, $0.01 par value; 100,000,000 shares authorized; 28,731,042 and 28,581,182 shares issued and outstanding as of September 24, 2016 and December 26, 2015, respectively	287			286
Additional paid-in-capital	185			36,870
Accumulated deficit	(80,421		)	(46,829		)
Total stockholders' deficit	(79,949		)	(9,673		)
Total liabilities and stockholders' deficit	$	112,339		$	120,650

WINGSTOP INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

(amounts in thousands, except per share data)

	Thirteen Weeks Ended
	September 24, 2016		September 26, 2015
Revenue:
Royalty revenue and franchise fees	$	13,660	$	11,587
Company-owned restaurant sales	8,150		7,547
Total revenue	21,810		19,134
Costs and expenses:
Cost of sales (1)	6,091		5,328
Selling, general and administrative	8,893		7,317
Depreciation and amortization	746		636
Total costs and expenses	15,730		13,281
Operating income	6,080		5,853
Interest expense, net	1,390		800
Other expense, net	216		96
Income before income tax expense	4,474		4,957
Income tax expense	1,721		1,784
Net income	$	2,753	$	3,173
Earnings per share
Basic	$	0.10	$	0.11
Diluted	$	0.09	$	0.11
Weighted average shares outstanding
Basic	28,725		28,581
Diluted	29,014		28,891
(1) exclusive of depreciation and amortization, shown separately

WINGSTOP INC. AND SUBSIDIARIES

Unaudited Supplemental Information

	Thirteen Weeks Ended
	September 24, 2016	September 26, 2015
Domestic Franchised Activity:
Beginning of period	831	714
Openings	31	24
Closures	—	(1	)
Restaurants end of period	862	737
Domestic Company-Owned Activity:
Beginning of period	20	19
Openings	—	—
Closures	—	—
Restaurants end of period	20	19
Total Domestic Restaurants	882	756
International Franchised Activity:
Beginning of period	63	52
Openings	4	3
Closures	—	(4	)
Restaurants end of period	67	51
Total System-wide Restaurants	949	807

WINGSTOP INC. AND SUBSIDIARIES

Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA

(Unaudited)

(in thousands)

	Thirteen Weeks Ended
	September 24, 2016		September 26, 2015
Net income	$	2,753	$	3,173
Interest expense, net	1,390		800
Income tax expense	1,721		1,784
Depreciation and amortization	746		636
EBITDA	$	6,610	$	6,393
Additional adjustments:
Transaction costs (a)	1,570		—
Stock-based compensation expense (b)	139		150
Adjusted EBITDA	$	8,319	$	6,543

(a) Represents costs and expenses related to refinancings of our credit agreement and our public offerings; all transaction costs are included in SG&A with the exception of $215,000 that is included in Other expense, net during the period ended September 24, 2016.

(b) Includes non-cash, stock-based compensation.

WINGSTOP INC. AND SUBSIDIARIES

Non-GAAP Financial Measures

Adjusted Net Income and Adjusted EPS

(Unaudited)

(in thousands, except per share data)

	Thirteen Weeks Ended
	September 24, 2016			September 26, 2015
Numerator:
Net income	$	2,753		$	3,173
Adjustments
Transaction costs (a)	1,570			—
Tax effect of adjustments (b)	(590		)	—
Adjusted net income	$	3,733		$	3,173
Denominator:
Weighted-average shares outstanding - diluted	29,014			28,891
Adjusted earnings per diluted share	$	0.13		$	0.11

(a) Represents costs and expenses related to refinancings of our credit agreement and our public offerings; all transaction costs are included in SG&A with the exception of $215,000 that is included in Other expense, net during the period ended September 24, 2016.

(b) Represents the tax effect of the aforementioned adjustments to reflect corporate income taxes at assumed effective tax rate of 37.6% for the period ended September 24, 2016, which includes provisions for U.S. federal income taxes, and assumes the respective statutory rates for applicable state and local jurisdictions.